What does 'sustainable supply chain' mean for the planet?
Companies are shaping the future of business from the wheels up.
Mon, Sep 17 2012 at 5:03 PM
As commerce becomes increasingly global, American corporations are taking steps to develop sustainable supply chains that span the country and the planet.
The new car on the lot, the T-shirt on the store shelf and even the Big Mac in a take-out bag are the result of complex supply chains, bringing parts and components together from around the world. Establishing a sustainable supply chain that conserves natural resources and reduces energy consumption involves everything from packaging and shipping to standards for raising pigs and chickens.
Key to establishing a sustainable supply chain “is to understand the larger system you’re in,” Peter Senge says in an interview with Harvard Business Review. Senge, the founder of the Society for Organizational Learning and the author of "The Necessary Revolution," cites the example of Coca-Cola. The soft-drink giant was taking steps to reduce water use in manufacturing from three liters per bottle to 2.5 liters. While taking steps to reduce water use in manufacturing, the soft-drink giant discovered that the greatest water use was in growing the sugar used to make Coke. Coca-Cola, Senge recalls, worked with the World Wildlife Fund to analyze the water footprint of Coke, prompting a shift from flood-irrigated sugarcane to drip-irrigated sugarcane.
Sometimes changes in the supply chain are prompted from outside the company. Greenpeace last year launched a protest against Mattel, the world’s largest toymaker, to urge a change in packaging made from the pulp of tropical hardwoods cut on the island of Sumatra. Following the protest, Mattel said “the company is developing a sustainable procurement policy for all of Mattel's product lines which will address the important issue of deforestation. The policy will include requirements for packaging suppliers to commit to sustainable forestry management practices.”
When corporations establish new sustainable supply chain policies, the ripple effect can have a big environmental impact. After all, when big buyers insist on greener business practices, sellers have to change how things are done to keep the customer happy. For example, fast-food giant McDonald's earlier this year announced a 10-year plan to buy all its pork for its U.S. business from farmers who do not house pregnant sows in gestation stalls, a practice many consider cruel.
Retail powerhouse Walmart requires all seafood suppliers — fresh and frozen, farmed and wild — to become third-party certified as sustainable using Marine Stewardship Council (MSC), Best Aquaculture Practices (BAP) or equivalent standards. More than three-quarter of the company’s seafood suppliers are third-party certified and an additional 8 percent have developed the required certification plans.
Shipping links the chain, and part of a sustainable supply chain is more efficient logistics. UPS, the Atlanta-based logistics company, in 2011 cut CO2 emissions by 83,000 metric tons by using advanced route-planning technology, cut driving buy 85 million miles, saving 8.4 million gallons of fuel.
The UPS green fleet — comprised of more than 2,500 alternative fuel vehicles — has traveled more than 200 million miles since 2000. The company has more than 1,000 package delivery vehicles in the United States, Germany, France, Chile and Brazil burning compressed natural gas (CNG). A CNG vehicle emits 95 percent fewer particulates than a diesel counterpart.
A major resource for companies wanting to establish a sustainable supply chain is the Green Suppliers Network, a collaborative venture among industry, the U.S. Environmental Protection Agency (EPA), and the U.S. Department of Commerce's National Institute of Standards and Technology Manufacturing Extension Partnership. The program works with manufacturers to help key suppliers assess production methods and look for ways to reduce energy consumption and minimize carbon footprint.
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